The donor tells you that your organization will receive a sizeable gift from him.
But there’s a problem – there are strings attached.
What should you do?
I’ll get to the answer in a moment. But first, let me tell you what happened last year to a client of ours.
The major gift officer had been cultivating a very-high-capacity donor who expressed a great deal of interest in a program of the MGO’s non-profit. One thing led to another, and the donor told the MGO that he was ready to make a $100,000 gift to the program.
The MGO was ecstatic. This donor had been giving $1,000 a year, and now – success!
But the donor wanted to meet to discuss the program details and said, “I have something else I would like to talk to you about.”
The MGO arranged the meeting and looked forward to answering the donor’s questions. This was going to be good!
The day of the meeting finally arrived, and here is an abridged version of how the conversation went:
Donor: “My wife and I are very excited about funding your X program. But in the last few months, an opportunity to realize a life-long dream of ours has caught our attention.”
The MGO leans forward in anticipation of even more good news.
Donor – continuing: “There is a program here in our city – it’s the [insert name] program. It is something my wife and I have been wanting to do for years. We’d like to give a gift of $500,000, but we want to do it through you, because there is not a non-profit organized to receive the gift.”
MGO: “That’s great. But the program you are talking about is not in our program lineup or even part of our mission. I don’t know how that would work.”
Donor: “I understand. It would just be a pass-through – I mean, it’s sort of like what you are doing, so I don’t see a conflict.”
MGO: “I can check. But I’m not sure that will work.”
Donor: “Well, we would like to give $100,000 to your program as we have been talking about. But I don’t see how we can do that if we can’t do this other program as well.”
And there you have it. A hostage situation.
Well, the MGO went back and consulted. And the leadership of her non-profit declined involvement and lost the $100,000 gift. Good for them.
Jeff and I have seen some version of this situation many times. Similar to the above story, we’ve seen a donor agree to give to one program the non-profit runs if they will also expand another program.
There are two problems with this second scenario. There is a bit of hostage taking-here, which is never good. And the donor is asking the non-profit to expand a program that the program leadership had no intention of expanding. The program leadership had determined their program priorities, and what the donor wanted did not fit into the plan.
This situation is a little more difficult than the first story above, in that the organization is already doing the program – they’re just being asked to expand it.
But here’s the thing: if the organization expands the program, it adds a layer of expense that must be sustained in the future. Who is going to support that? Also, it adds distraction to the program staff, taking away the planned focus of the non-profit.
In all of these situations, we recommend staying true to the organizational plan and refusing the gift. You cannot let a donor run your organization. Most of them understand this point. But some don’t. And you mustn’t fall prey to the allure of their money. ( Tweet it! )
Richard
Related Posts
-
Who Gets Credit? #3 in Measuring MGO Performance Series
August 10, 2015
-
Pay for Performance? #4 of Measuring MGO Performance Series
August 12, 2015
-
What Do You Control in Major Gifts?
January 17, 2014
Richard (Jeff)
This is a very timely article for all of us in the non-profit world. With the economy, investment and new businesses booming, we should be very careful not to allow our organization to “chase the dollars.” I am watching small and medium-sized non-profits tempted to change their original defined mission purpose in order to accept large donations. Even major universities and non-profits are being tempted to alter or expand existing mission purposes.
I thought I would share another area of caution or warning. Some charities are connecting with “new” donors having what appears to be great financial capacity because they are the principals in new businesses rapidly growing in the geographic area. The charity may find the founder of the new business offering to make a six or even seven-figure gift to the charity, yet having no prior gift-giving history. My experience has shown that unless the charity undertakers some serious investigation and research into the new business and the possible source of the prospective donor’s money (gift), the charity may well be setting itself up for future public embarrassment and serious financial problems. I have observed a number of charities except major donations from these start-up companies only to later learn that the donor (the founder of the company) was using investor’s capital to fund the donation. If the investors learn of this diversion of capital or if the company fails and the IRS becomes involved, not only is there the potential for a lot of bad public news, but the charity ofttimes is required to return the donation to the company or creditors.
Lesson – be careful of strangers bearing supposed gifts. Not all that glitters is gold.
Keep up the good work.
McClain Bybee
Managing Director (retired)
LDS Philanthropies